Best Online Brokers, 2017

However you invest, it's a great time to shop for an online broker. Firms have been trimming commissions, expanding their online tools, offering more transaction-free mutual funds and enhancing their mobile apps. Eager to win your business, brokers are also offering signing bonuses, such as a $1,000 bounty from TD Ameritrade, and up to 500 free trades for two years at Fidelity Investments and Charles Schwab.

To help you choose the best broker, we surveyed seven major firms: Ally Invest (which acquired TradeKing last year), E*Trade Financial, Fidelity, Merrill Edge, Schwab, TD Ameritrade and Vanguard. Why this lineup? To be included in our survey, brokers had to offer online trading of stocks, exchange-traded funds, mutual funds and individual bonds, as well as provide some retirement-planning tools and advisory services. We excluded brokers that primarily focus on active traders--those catering to day traders, for instance. T. Rowe Price declined to participate. Scottrade wasn't included because TD Ameritrade recently purchased the firm (and is in the process of absorbing Scottrade's clients).

And the winners are...

In a tight contest, Fidelity and Merrill Edge tie for first place, squeaking past Schwab. All three firms rank high in key categories, such as commissions and fees, tools, and customer service. But we found some important differences. For example, Merrill ranks best for research, but Fidelity and Schwab offer many more mutual funds that can be bought without transaction fees, along with a larger selection of corporate and municipal bonds. Fidelity and Schwab also rack up points for their wide range of advisory and financial-planning services.

Of course, the right broker for you may not be one of our top-ranked firms. If you like to trade stocks, particularly on a mobile device, E*Trade may be your best bet, thanks to excellent screening tools and charts, as well as comprehensive information about individual stocks, all available on its app. TD Ameritrade ranks high for its research offerings and ample lineup of no-transaction-fee (NTF) mutual funds and ETFs, many of which can be purchased without trading commissions. Ally may appeal to young investors who want a low-cost, no-frills broker joined to an online bank with competitive interest rates on certificates of deposit and savings accounts.

Vanguard falls behind the leaders in almost every category, losing points for its bare-bones website, its basic mobile app and its lack of stock research. But these drawbacks don't make the fund giant a bad choice for investors who buy and hold for the long term. Vanguard brokerage customers don't pay a penny in commissions to access the firm's low-cost mutual funds and ETFs, many of which can save you money over the long run compared with funds that have higher ongoing fees.

For a deeper dive, check out the results in each category below. To find the best broker for you, see the box on the facing page, where we name the winners for several types of investors.

Commissions and fees

Fidelity launched a price war early this year when it cut its stock commissions to $4.95 per trade. The move prompted Schwab to match Fidelity's rate, and it led other brokers, such as E*Trade and TD Ameritrade, to lower commissions, too. The upshot: You shouldn't pay more than a few bucks to trade stocks or ETFs, and you can get lower prices and even free trades at some brokers. E*Trade, for instance, trims its commission from $6.95 to $4.95 for clients who make at least 30 trades a quarter.

Merrill's base rate of $6.95 for stock trades looks pricey at first glance. But customers who have at least $50,000 in combined balances at the brokerage firm and Bank of America (Merrill's parent) qualify for up to 30 free trades a month, and they also receive such perks as a cash-back bonus on credit cards and discounted rates on auto loans. Stash at least $100,000 with Merrill and BofA (combined) and you'll earn up to 100 free trades per month and higher levels of "preferred rewards." "Most of our clients aren't paying for stock trades," says David Poole, a Merrill managing director.

At Schwab, customers with a gripe can get a refund on all fees, if they ask. The firm recently expanded its "satisfaction guarantee" to cover all commissions, advisory fees and other charges. "If a client does any business with us and isn't satisfied, we'll refund the fees, no questions asked," says Terri Kallsen, head of Schwab Investor Services. Ally's base rate of $4.95 lands it on the leader board for stock trades, and the firm trims that rate to $3.95 for clients who make at least 30 trades a quarter. Ally also charges a relatively low $9.95 to buy or sell mutual funds. Those fees are much less than what Schwab levies for trading funds outside its NTF network ($76 to buy but no charge to sell). Fidelity and TD Ameritrade both charge about $50 to buy mutual funds outside their NTF networks (no charge to sell at Fidelity), while E*Trade, Merrill and Vanguard levy $20 per transaction. But Ally doesn't offer any NTF mutual funds or ETFs--a big drawback that could cost you quite a bit in fees if you buy and sell a lot of funds. "No-fee funds are something we're starting to look at," says Rich Hagen, president of Ally Invest.

Unlike the other brokers, Vanguard's commission structure doesn't encourage trading. The firm charges $7 for the first 25 stock trades per calendar year and a steep $20 after that. Transaction-fee funds also cost $20 per trade. But customers can load up on all Vanguard mutual funds and ETFs without having to pay sales charges--a good deal if you invest mainly in low-cost index funds. One small nuisance: Customers must hold at least $10,000 in Vanguard mutual funds or ETFs or sign up for electronic statements to avoid a $20 annual account "service" fee.

Investment choices

Aside from Ally, every broker surveyed here offers thousands of funds without a transaction fee. Schwab tops the list with 3,976 no-transaction-fee funds, all with minimum investments below $50,000 (our cutoff to be included in this category). Schwab also offers 231 commission-free ETFs, the most of any broker in our survey. The lineup includes many low-fee index funds sponsored by Schwab, along with ETFs from such firms as Guggenheim, PowerShares, State Street and Wisdom­Tree. Schwab's vast number of no-fee mutual funds and ETFs vaulted it to first place in this category.

E*Trade also scores high for its substantial roster of no-fee funds (3,887), as does TD Ameritrade (3,749). Both firms also offer more than 100 commission-free ETFs. But TD's lineup includes more low-cost funds from sponsors such as iShares and Vanguard; E*Trade emphasizes higher-fee ETFs in niche investment areas, such as Global X S&P 500 Catholic Values (CATH) and WisdomTree Managed Futures Strategy (WDTI).

Fidelity ranks competitively, too, with 3,532 NTF mutual funds and 85 commission-free ETFs, including dozens of iShares ETFs with low-to-minuscule expense ratios. Investors at Merrill have fewer choices in NTF funds (2,251). Vanguard also looks weak in this arena, with just 2,531 NTF mutual funds, although that includes all of the firm's proprietary funds (whose expense ratios undercut those of most of its rivals). The firm also offers its 70 Vanguard ETFs without commissions.

Beyond funds and ETFs, each broker sells individual bonds, including Treasuries, municipal and corporate issues, and high-yield "junk" bonds. TD's lineup of more than 28,000 corporate IOUs exceeds the others' offerings. But if you want bonds issued by giants such as AT&T or General Electric, you can find them anywhere.

One note: Bonds don't trade on an open market, and prices tend to be opaque. Most brokerage firms charge commissions of $1 per bond with a $1,000 face value, passing on the same prices that they get when they acquire the bonds from other dealers (which include the dealer's markup). Merrill and TD, however, sell bonds on a "net yield" basis, with the broker's profit built into the prices. Some studies have found that customers tend to pay more for these net-yield bonds than they would with a flat-rate commission.

Research

With commissions at rock bottom these days, a big distinguishing feature among brokers is the breadth and quality of research they furnish. Every firm provides snapshot reports on stocks, including basic data such as revenues and earnings. Most brokers also offer reports on bonds from ratings agencies, such as Moody's and Standard & Poor's. But a few firms go further, supplying in-depth market analysis and research on companies, along with all sorts of investing ideas.

Scoring best in this category, largely for its stock research, is Merrill Edge. Customers can see detailed research on more than 1,300 companies covered by Bank of America Merrill Lynch analysts, including missives on giants such as Microsoft and Wal-Mart Stores, as well as a slew of smaller companies, real estate investment trusts and master limited partnerships. Merrill also includes more than a dozen lists of recommended stocks, including "Warren Buffett Stocks" and "Earnings Turnarounds." And the firm produces pieces on big themes, such as a recent report titled "Uberfication: Global Sharing Economy Primer Picks."

Schwab, E*Trade and TD Ameritrade earn high scores, too, supplying stock research from well-established firms such as Credit Suisse and CFRA. Schwab throws in 1,600 Morningstar stock reports, along with its own ratings, which gives its score in this category a slight bump.

For avid stock traders, though, E*Trade may be best. The firm jams its site with analyst recommendations, charts, data and investing ideas, including dozens of stock screens. Customers at TD Ameritrade and Schwab can find plenty of investing ideas, too, such as Credit Suisse's U.S. stock "focus list," available on both sites. If you want in-depth mutual fund research, though, you won't find it on any broker's site.

The other three outfits--Ally, Fidelity and Vanguard--don't score well in this area. At Ally, CFRA provides the only in-depth stock research. Fidelity lists more than a dozen research reports for big companies, such as Apple. But most of them are just technical analysis--evaluating stocks based on trading patterns or other data--and lack detail about corporate business developments and industry trends.

Tools

Online calculators and tools can help you track your portfolio's performance, screen for funds, plan for retirement and generally keep tabs on your financial life. Some sites get an edge in this category by supplying handier and more comprehensive tools than others.

Merrill earns the highest score, with Fidelity coming in a close second. Along with top-notch screeners for funds and stocks, Merrill provides Morningstar's powerful Portfolio X-Ray, a tool that can dig into your fund holdings and individual stocks and, among other things, analyze areas of overlap and market factors influencing your returns. Most of these tools are easy to find, too, by using the drop-down menus on Merrill's home page.

Finding tools on Fidelity's site takes more poking around. But Fidelity's portfolio-analysis tools are robust and easy to use, and you can configure them in multiple ways (to track your performance against not just traditional indexes but also blended market benchmarks, for example). Fidelity also provides top-notch budgeting and retirement-planning tools. And you can see a comprehensive picture of all your finances, including accounts held at other firms, your mortgage balance and your home's market value.

As you might expect, E*Trade excels with tools for stocks, ETFs and options. TD Ameritrade offers a "Premier List" of top-rated mutual funds selected by Morningstar (all available without transaction fees). Schwab makes it easy to find tools, too. We especially like the firm's preferred-stock screener, which includes credit ratings from Moody's and S&P Capital IQ, as well as key data points, such as dividend yields and upcoming "call" dates, when issuers may redeem the securities.

Vanguard's tools focus on nuts-and-bolts planning--things such as setting up an investment mix and creating a retirement plan. Customers won't find targeted stock screens, though, and can only import outside account data if they're customers of Vanguard's advisory service. Ally furnishes a few stock screeners but doesn't offer retirement-planning tools. Ally says it plans to roll out more screeners and tools over the next year.

Ease of use

Finding what you want on a broker's site can feel like wandering through a maze of charts, data and jargon-filled reports.

Overall, Fidelity's relatively intuitive site helps you avoid information overload. The firm recently redesigned its ETF research center, added voice recognition at its call centers to identify customers without a passcode, and enhanced its "quick quote bar" to facilitate trading. Fidelity also wins points for its 2% cash-back Visa card--with direct deposit of cash rebates into brokerage accounts--along with services such as FidSafe, a free online vault where customers can store valuable documents. (Merrill is the only other firm that offers a similar safe-like service.)

With access to Bank of America offices, Merrill provides the most branches (4,600) for its clients to meet with a financial adviser. Customers can easily transfer money to Bank of America with one-click convenience, and they can see all of their savings, checking and investment accounts at both the bank's and the brokerage's websites. Schwab also blends brokerage and banking services well, pro­viding high-yield checking and other bank services, as well as mortgages through Quicken Loans. One drawback: Schwab's American Express cash-back card rebates just 1.5% of the amount of your purchases, and fewer merchants accept Amex.

Also competitive in this category is TD Ameritrade. The firm is ex­panding its branch network from about 100 locations to more than 400 (including Scottrade's shops). New features on TD's site include a revamped ETF research center and an upgraded "dock" with news from Yahoo Finance. E*Trade's site, packed with technical tools, news and data, may not be as easy to navigate for novices. Cust­omers can do some banking through E*Trade, but the firm doesn't provide a cash-back card or services such as a digital vault.

Because they are purely online brokers, Ally and Vanguard aren't as convenient, losing points for their lack of physical branches. Ally's cash-back Visa card, which rebates a base rate of 1%, isn't as competitive as cards from Fidelity or Schwab. Also, Ally's cash rewards aren't automatically deposited into a brokerage account, and customers can't import account data from other firms. Vanguard doesn't offer a cash-back card or many banking services. Its site lacks real-time streaming quotes and other user-friendly tools to trade stocks and ETFs.

Mobile apps

Brokers' apps are be­coming handy enough to allow customers to conduct almost all of their business via a mobile device, whether it's buying stocks, trading options or depositing checks. E*Trade's app scores best. It includes a full suite of trading features, as well as stock research reports, lists of "all-star" funds and multiple ways to screen for stocks, ETFs and funds.

Merrill's app includes several calculators and tools for college savings and retirement planning, along with research from CFRA and Morningstar. Cust­omers can't screen for stocks or funds, though. Fidelity and Schwab both win points for their apps' user-friendliness: Trading, transferring money and depositing checks all work seamlessly. Fidelity customers can screen for ETFs, too, and Schwab supplies useful stock ratings, along with an "Idea Hub" for trading options.

Apps from Ally and TD fall short in one big area: They lack the ability to trade mutual funds. Vanguard's app doesn't let you buy and sell non-Vanguard funds--also a drawback. Customers can deposit checks, but they can't transfer money on Vanguard's app, limiting its usefulness.

Investment advice

Brokers are so keen to handle your money that most will set up a financial plan and review your portfolio at no charge. They can also manage your investments, for a fee, or help with things such as estate plans and insurance.

Taking the lead in this category are Fidelity, Schwab and Vanguard. Fidelity and Schwab score well for a wide array of planning services and managed accounts, such as a Fidelity portfolio dedicated to indi­vidual municipal bonds and one at Schwab focused on dividend-growth stocks. At Fidelity, fees for separately managed accounts start at 1.20% annually but are reduced by "credits" for some of the costs in the portfolios' fund holdings. For clients with at least $25,000, Schwab offers tailored portfolios of ETFs, with an annual advisory fee of 0.28% (capped at $900 per quarter for high-value accounts).

Vanguard customers can get into a managed account with a $50,000 minimum investment. Annual fees are 0.30%, no matter what investing strategy you choose. These accounts hold Vanguard ETFs and the Admiral share class of its mutual funds, which charge some of the lowest expense ratios in the industry.

E*Trade, Merrill and TD offer managed portfolios, starting at 0.75% annually at TD, 0.85% at Merrill and 0.90% at E*Trade. All three firms provide plenty of choices, though, such as a "supplemental income" portfolio at TD and an aggressive-growth package at E*Trade.

If you don't have much to invest, you could opt for a "robo" service, which should cost less and may be just as effective as brokers' higher-fee accounts. These portfolios of ETFs and mutual funds are automatically adjusted to maintain a fixed mix of stocks and bonds. Investment minimums are as low as $2,500 at Ally but typically start at $5,000, with annual management fees of 0.30% at Ally, E*Trade and TD. Fidelity charges a bit more, 0.35% to 0.40%. But its fees include underlying fund expenses. Vanguard doesn't offer a robo, but its Personal Advisor service is essentially the same thing. Plus, Vanguard will tailor the investment mix to your specific situation, following a consultation with a Vanguard adviser. (For more on automated investing services, see Robo Advisers Get the Human Touch.)

Schwab offers a similar service, charging a management fee of 0.28% for a personalized portfolio of ETFs, constructed with the help of a client's dedicated financial adviser. Customers can also opt for Schwab's Intelligent Portfolios--baskets of ETFs that the firm selects and rebalances without charging a separate management fee. The downside of these portfolios is that even the most aggressive ones--with hefty amounts of stock--hold 6.9% in cash (and much more in conservative portfolios). Maintaining that much cash can drag down returns in a strong market.

At the opposite end of the cost spectrum is Merrill, which charges a 0.45% management fee for its robo service. Merrill says that the accounts aren't just based on algorithms, however, and that customers "have access to a human being whenever they need help."

A Broker for Every Investor

Best for mutual fund investors: Schwab. Offering 3,976 funds with no loads, no transaction fees and investment minimums of less than $50,000, Schwab edges the competition. Need some help? Pick from Schwab's "select list" of 168 no-transaction-fee mutual funds, a roster that includes many solid performers with reasonable expense ratios.

Best for ETF investors: Schwab. The firm's 231 commission-free exchange-traded funds put it on top in this category. Many of these ETFs have wafer-thin expense ratios, enabling investors to build a low-cost portfolio without paying a penny in trading commissions.

Best for active stock traders: Merrill Edge. Investors can qualify for 30 free trades per month by having at least $50,000 in combined balances at Merrill and parent Bank of America. Maintain at least a $100,000 balance and you get 100 free trades per month. Runner-up: Ally Invest. The firm trims commissions from $4.95 to $3.95 for investors who make at least 30 trades a quarter, with no investment minimums.

Best for investors on the go: E*Trade. Packed with handy features, E*Trade's app lets you buy or sell stocks, mutual funds and options, as well as run screens, deposit checks and pay bills. Stock research is also available, something most brokers exclude from their apps.

Best for managing cash: Fidelity. Customers can easily pay bills and see a complete picture of their financial life on Fidelity's site, including mortgages and balances in non-Fidelity accounts. Fidelity's Visa Rewards card, which pays back 2% on all purchases, beats the cash rebates from cards of most other brokers.

Best for retirees: Vanguard. Low fees throughout its lineup of mutual funds and ETFs make Vanguard a top choice for retirees (or anyone trying to save a few bucks). The firm charges 0.30% a year to manage accounts, one of the lowest fees in the business.

Daren Fonda is an associate editor at Kiplinger.